Preparing a bank reconciliation and journal entries
The December cash records of Dunlap Insurance follow:
Cash Receipts Cash Payments
Date Cash Debits Check No. Cash Credit
Dec. 4 $4,170 1416 $ 860
9 510 1417 130
14 5 30 1418 650
17 2,180 1419 1,490
31 1,850 1420 1,440
Dunlap’s Cash account shows a balance of $16,740 at December 31. On December 31, Dunlap Insurance received the following bank statement:
Bank Statement for December
Beginning Balance $13,600
Deposits and other Credits
Dec. 1 EFT $ 300
22 BC 1,400 9,090
Checks and other Debits
Dec 8 NSF $1,000
Dec 11 (Check 1416) 860
Dec 19 EFT 700
Dec 22 (Check 1417) 130
Dec 29 (Check 1418) 650
Dec 31 (Check 1419) 1,940
Dec 31 SC 60 (5,340 )
Ending balance $ 17,350
Explanations: BC = bank collection; EFT = electronic funds transfer;
NSF = nonsufficient funds checks; SC = service charge
a. The EFT credit was a receipt of rent. The EFT debit was an insurance payment.
b. The NSF check was received from a customer
c. The $1400 bank collection was a note receivable.
d. The correct amount of check 1419 for rent is $1940. Dunlap’s controller mistakenly recorded the check for $1490
Accounting for uncollectible accounts using the allowance and direct write-off methods, and reporting receivables on the balance sheet
On August 31, 2012, Daisy Floral Supply had a $155,000 debit balance in Accounts receivable and a $6,200 credit balance in Allowance for uncollectible accounts.
During September, Daisy made:
* sales on account, $590,000.
* collections on account $62,700
* write-offs of uncollectible receivables, $7,000
Accounting for uncollectible accounts using allowance method, and reporting receivables on the balance sheet
At September 30, 2012, the accounts of Mountain Terrace Medical Center (MTMC) include the following:
Allowance for uncollectible accounts (credit balance)……………..3,500
During the last quarter of 2012, MTMC completed the following selected transactions
Dec 28 Wrote off accounts receivable as uncollectible: Regan, Co., $1,300;
Owen Mac, $900; and Rain, Inc., $700……………………………………….
Dec 31 Recorded uncollectible account expense based on the aging of accounts
Receivable, as follows………………………………………………………
Age of Accounts
1-30 31-60 61-90 over 90
Accounts Receivable Days Days Days Days
$165,000…………… $97,000 $37,000 $14,000 $17,000
uncollectible 0.3% 3% 30% 35%
1. Journalize the transactions
2. Open the allowance for uncollectible accounts T-account, and post entries affecting the account. Keep a running Balance
3. Show how MTMC should report net accounts receivable on its December 31, 2012 balance sheet. Use the three line reporting format.
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